As a 40% taxpayer should I get an offset mortgage

freestyle_3 · 3 January 2006 at 11:44PM

After 2 years from my first mortgage. I am researching new mortages.

Up until now I've been looking at tracker's.

However on the snoozing forum I saw this quote

It's said if you are a 40% tax payer, offsetting your savings account against your mortgage is equivalent to a savings rate of 9%. We have provided the following table to help you select an offset mortgage with a good interest rate.

Anyone got a spreadsheet or something that I can do the maths on?

Just to point out. I have no savings, and my current account is only ever at most £2K in the bank.

freestyle_3 · 3 January 2006 at 11:56PM

Just answered my own question

But as a guide, a standard taxpayer needs around £20,000 in savings behind a £100,000 mortgage to make the offset deal better value than a traditional mortgage. For a higher rate taxpayer the savings requirement drops to around £10,000. (These figures are based on a typical 4.69% fixed offset rate, compared with a typical 4.49% rate for a tracker.) These figures will change as interest rates vary and, in all probability, as the cost differential between an offset and a traditional mortgage closes.

michaels · 4 January 2006 at 11:14AM

And of course that is assuming your savings are not put safely into an ISA paying interest tax free at a rate potential higher than the 4.49 you are paying on the tracker...

As a 40% taxpayer should I get an offset mortgage

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